News / Economy

US Anti-Corruption Law Snags Major Tech Company

FILE-This Tuesday, Aug. 21, 2012, file photo, shows an exterior view of Hewlett Packard Co.'s headquarters in Palo Alto, California.
FILE-This Tuesday, Aug. 21, 2012, file photo, shows an exterior view of Hewlett Packard Co.'s headquarters in Palo Alto, California.
Earlier this month, the U.S. technology company Hewlett Packard agreed to plead guilty to bribery charges involving its Russian, Polish, and Mexican subsidiaries. 
 
Hewlett Packard admitted to the U.S. Department of Justice that it bribed Russian officials in hopes of landing a lucrative contract with Moscow’s Office of the Prosecutor General.  In Poland, HP admitted to bribery connected to contracts with the national police agency, while in Mexico, the illicit cash was tied to deals with Pemex, the state oil company.
 
What snared Palo Alto, California-based “HP” is the Foreign Corrupt Practices Act (FCPA), a groundbreaking law enacted nearly four decades ago.
 
HP’s agreement to pay US$108 million in both criminal and civil penalties is the tenth largest settlement ever under the FCPA. Other corporations that have been caught in FCPA’s net include Walmart, Halliburton, KBR, Siemens, BAE Systems, and Daimler AG.
 
Julie DiMauro, Executive Editor of the anti-corruption FCPA Blog, describes the impact upon HP for getting caught.  “The penalty amount,” she says, “might not be the true deterrent here. What could be, to it and other companies, is the ample negative publicity it is getting for its actions in multiple countries.”
 
The Foreign Corrupt Practices Act was signed into law by President Jimmy Carter in December, 1977. It was enacted in the wake of a U.S Securities and Exchange investigation that found more than 400 U.S. corporations had collectively paid more than $300 million in bribes to foreign officials and political parties. 
 
“The passage of the FCPA itself was revolutionary,” says Sarah Pray at the good governance and accountability organization Open Society Foundations. “In an era when you could still deduct bribes from your taxes in some countries, the United States took a stand.”
 
The FCPA casts a broad shadow covering both corporations and individuals. Under the law’s provisions, anyone – regardless of nationality - is in violation of the law if they engage in bribery while in the United States.  That denies legal haven to foreigners engaging in corrupt activities offshore while in the U.S. The FCPA also applies to U.S. citizens’ financial actions overseas.  And, since 1997, it covers foreign corporations that are traded on U.S. stock exchanges and securities markets.
 
The FCPA also blocks the use of proxies to engage in illegalities.

“The FCPA’s third party liability provisions,” says Washington attorney and FCPA expert Lucinda Low, “makes it a crime to make a payment to any person, knowing that the payment or other value will be passed through in whole or in part of a foreign government official or other covered [by the FCPA] recipient.”
 
Interestingly, though, so-called facilitation or “grease” payments to foreign officials may be legal under FCPA, if done to expedite that official’s performance of duties.  And, payments to foreign officials may also be legal if the host country permits such activity.
 
Enacting the FCPA promoted a number of other nations to follow suit.   Britain passed the Bribery Act, while Canada enacted a similar law. Anti-corruption laws have been enacted in China, Thailand, Malaysia, Brazil, and many other countries. The United Nations has responded by enacting the U.N. Convention on Corruption, while the 40 state Organization for Economic Cooperation and Development (OECD) enacted, in 1997, an Anti-Bribery Convention, though the anti-corruption group Transparency International chides the OECD for not insisting its member states more aggressively enforce the provisions of that agreement.
 
While the FCPA has a broad reach, a former Justice Department FCPA prosecutor says it has a limitation – time – that needs to be changed. 

“I think there are statute of limitations issues [within the FCPA],” says Kathleen Hamann. ”A lot of complex economic crimes in the U.S. have a 10 year statute of limitations. But, the FCPA has a five year statute of limitations.” Hamann, now in private practice, adds”I think there are a lot of individuals who end up not being prosecuted because the statute of limitations has run out.” She says “I think we need to treat it [bribery and other crimes covered by FCPA] as what it is, a complex financial crime.”
 
Sarah Pray calls for the FCPA’s expansion in another direction.

“The United States should outlaw all commercial bribery, not just bribery of foreign officials. Secondly,” Pray adds, “the United States should outlaw ‘facilitation payments. The line between a bribe and a facilitation payment is a blurred one, and this distinction should be eliminated.”
 
Along with penalties for misbehavior, Lucinda Low says the FCPA has compelled the business world to become proactive. “FCPA”, she says, “created expectations that companies will institute internal programs and controls to prevent, detect, and remediate bribery and corruption throughout their organizations. “

Jeffrey Young

Jeffrey Young came to the “Corruption” beat after years of doing news analysis, primarily on global strategic issues such as nuclear proliferation.  During most of 2013, he was on special assignment in Baghdad and elsewhere with the Special Inspector General for Iraq Reconstruction (SIGIR).  Previous VOA activities include VOA-TV, where he created the “How America Works” and “How America Elects” series, and the “Focus” news analysis unit.

You May Like

Egypt's Suez Canal Dreams Tempered by Continued Unrest

Seen as a potential driver of recovery, Cairo’s plan to expand waterway had been raising hopes to give country much needed economic boost More

Ebola Maternity Ward in Sierra Leone First of its Kind

Country already had one of world's highest maternal mortality rates before Ebola arrived, virus has added even more complications to health care More

Malaysia Flight 370 Disappearance Ruled Accident

Aircraft disappeared on March 8, 2014; with ruling, families of 239 passengers and crew can now seek compensation from airline More

This forum has been closed.
Comment Sorting
Comments
     
by: ed
April 24, 2014 10:52 PM
Julie DiMauro, Executive Editor of the anti-corruption FCPA Blog, describes the impact upon HP for getting caught. “The penalty amount,” she says, “might not be the true deterrent here. What could be, to it and other companies, is the ample negative publicity it is getting for its actions in multiple countries.”

Thanks Julie. Actually, the true deterrent here doesn't exist, which is likely by design if those evil companies bribed local officials too in order to have the law written in a way that wouldn't present a real threat. Until the public forces government to treat the Directors of Global Money Grab Inc like it does poor people and slams their crooked butts into a cage, it will continue to be business as usual for the Government Industrial Complex. Here no evil, see no evil, speak no evil.


by: Gervazio Degan from: Joao Pessoa, Brazil
April 21, 2014 10:22 AM
I don't understand because Brazil is not cited among the countries bribed.

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Groundbreaking Hand-Painted Documentary About Van Gogh in Productioni
X
George Putic
January 29, 2015 9:43 PM
The troubled life of the famous 19th century Dutch painter Vincent van Gogh has been told through many books and films, but never in the way a group of filmmakers now intends to do. "Loving Vincent " will be the first ever feature-length film made of animated hand-painted images, done in the style of the late artist. VOA’s George Putic reports.
Video

Video Groundbreaking Hand-Painted Documentary About Van Gogh in Production

The troubled life of the famous 19th century Dutch painter Vincent van Gogh has been told through many books and films, but never in the way a group of filmmakers now intends to do. "Loving Vincent " will be the first ever feature-length film made of animated hand-painted images, done in the style of the late artist. VOA’s George Putic reports.
Video

Video Rock-Consuming Organisms Alter Views of Life Processes

Scientists thought they knew much about how life works, until a discovery more than two decades ago challenged conventional beliefs. Scientists found that there are organisms that breathe rocks. And it is only recently that the scientific community is accepting that there are organisms that could get energy out of rocks. Correspondent Elizabeth Lee reports.
Video

Video Paris Attacks Highlight Global Weapons Black Market

As law enforcement officials piece together how the Paris and Belgian terror cells carried out their recent attacks, questions are being asked about how they obtained military grade assault weapons - which are illegal in the European Union. As VOA's Jeff Swicord reports, experts say there is a very active worldwide black market for these weapons, and criminals and terrorists are buying.
Video

Video Activists Accuse China of Targeting Religious Freedom

The U.S.-based Chinese religious rights group ChinaAid says 2014 was the worst year for religious freedom in China since the end of the Cultural Revolution. As Ye Fan reports, activists say Beijing has been tightening religious controls ever since Chinese leader Xi Jinping came to office. Hu Wei narrates.
Video

Video Super Bowl Ads Compete for Eyes on TV, Web

Super Bowl Sunday (Feb. 1) is about more than just the NFL's American football championship and big parties to watch the game. Viewers also tune in for the world famous commercials that send Facebook and Twitter abuzz. Daniela Schrier reports on the social media rewards for America’s priciest advertising.
Video

Video Theologians Cast Doubt on Morality of Drone Strikes

In 2006, stirred by photos of U.S. soldiers mistreating Iraqi prisoners, a group of American faith leaders and academics launched the National Religious Campaign Against Torture. It played an important role in getting Congress to investigate, and the president to ban, torture. VOA's Jerome Socolovsky reports.
Video

Video Freedom on Decline Worldwide, Report Says

The state of global freedom declined for the ninth consecutive year in 2014, according to global watchdog Freedom House's annual report released Wednesday. VOA's William Gallo has more.
Video

Video MRI Seems to Help Diagnose Prostate Cancer, Preliminary Study Shows

Just as with mammography used to detect breast cancer, there's a lot of controversy about tests used to diagnose prostate cancer. Fortunately, a new study shows doctors may now have a more reliable way to diagnose prostate cancer for high risk patients. More from VOA's Carol Pearson.
Video

Video Smartphones About to Make Leap, Carry Basic Senses

Long-distance communication contains mostly sounds and pictures - for now. But scientists in Britain say they are close to creating additions for our smartphones that will make it possible to send taste, smell and even a basic touch. VOA’s George Putic reports.
Video

Video Former Sudan 'Lost Boy' Becomes Chess Master in NYC

In the mid-1980’s, thousands of Sudanese boys escaped the country's civil war by walking for weeks, then months and finally for more than a year, up to 1,500 kilometers across three countries. The so-called Lost Boys of the Sudan had little time for games. But one of them later mastered the game of chess, and now teaches it to children in the New York area. VOA’s Bernard Shusman in New York has his story.
Video

Video NASA Monitors Earth’s Vital Signs From Space

The U.S. space agency, NASA, is wrapping up its busiest 12-month period in more than a decade, with three missions launched in 2014 and two this month, one in early January and the fifth scheduled for January 29. As VOA’s Rosanne Skirble reports, the instruments being lifted into orbit are focused on Earth’s vital life support systems and how they are responding to a warmer planet.
Video

Video Crowded Republican Presidential Field Off to Early Start for 2016

It seems early, but the 2016 U.S. presidential election campaign is already heating up. Though no one has officially announced a candidacy, several potential Republican contenders have been busy speaking to conservative groups about making a White House run next year. Many of the possible contenders are critical of the Obama administration’s foreign policy record. VOA national correspondent Jim Malone reports.

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

All About America

AppleAndroid

World Currencies

EUR
USD
0.8837
JPY
USD
117.92
GBP
USD
0.6608
CAD
USD
1.2531
INR
USD
61.900

Rates may not be current.